The Bank of Canada (BoC) announced in a market notice that later this year it’s planning to restart the securities lending program (SLP), designed to support the liquidity of Government of Canada (GoC) securities markets.
Over the course of this summer, BoC will engage with its primary dealer counterparties on technical aspects of market operations system enhancements to facilitate their operational readiness ahead of restarting the SLP. Before the SLP is restarted, the central bank will issue a market notice with operational details, the start date and updated terms and conditions.
“This market notice is intended to make market participants aware of this upcoming change ahead of time and inform primary dealers that the Bank of Canada intends to engage with them on an operational on-boarding process over the course of this summer, to ensure their readiness to participate in the SLP when it commences. The start date of the SLP will, as such, depend on the completion of this operational on-boarding process. When the SLP restarts, the current daily Securities Repo Operations (SRO) will be discontinued,” the BoC wrote.
In July 2020, the Bank of Canada suspended its SLP and introduced the SRO as a temporary source of GoC nominal bonds and treasury bills to support liquidity in the securities financing market. Since the BoC was acquiring a large amount of GoC securities under the Government Bond Purchase Program, it was important to support a well-functioning securities financing market by making a portion of these securities available to the market in an expedient manner, and in higher volumes than the SLP was designed for.